Longevity Risk, Subjective Survival Expectations, and Individual Saving Behavior
52 Pages Posted: 14 Nov 2010 Last revised: 24 Mar 2011
Date Written: March 11, 2011
Theoretical studies suggest that unexpected changes in future survival probabilities (longevity risk) are important determinants of individuals’ decisions about consumption, saving, asset allocation, and retirement timing. This study provides empirical evidence that individuals are indeed aware of longevity risk and that this awareness affects their savings decisions. These results are based on a data set that matches subjective survival expectations and savings indicators from the Survey of Health, Ageing and Retirement in Europe (SHARE) with life table data from the Human Mortality Database.
Keywords: longevity risk, subjective survival expectations, forecast dispersion, savings behavior
JEL Classification: D14, D84, D91, H31, J11
Suggested Citation: Suggested Citation